2.2. Summary of significant accounting policies
a. Current versus non-current classification
The Company presents assets and liabilities in the balance
sheet based on current/ non-current classification.
An asset is treated as current when it is:
Ý Expected to be realized in normal operating cycle or within
twelve months after the reporting period,
Ý Held primarily for the purpose of trading,
Ý Expected to be realized within twelve months after the
reporting period, or
Ý Cash or cash equivalents unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period.
AIL other assets are classified as non-current.
A liability is current when:
Ý It is expected to be settled in normal operating cycle,
Ý It is due to be settled within twelve months after the
reporting period, or
Ý There is no unconditional right to defer the settlement of
the liability for at least twelve months after the reporting
period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non¬
current assets and LiabiLities.
The operating cycle is the time between the acquisition of
assets for processing and their reaLization in cash and cash
equivalents. The Company has identified period of twelve
months as its operating cycle.
b. Significant accounting judgements, estimates and
assumptions
The preparation of the Company's Standalone Financial
Statements in conformity with Ind AS requires management
to make judgements, estimates and assumptions that
affect the reported amounts of assets and liabilities,
the accompanying discLosures, and the discLosure of
contingent assets and contingent LiabiLities on the date
of the StandaLone FinanciaL Statements and the reported
amounts of revenues and expenses for the year reported.
Actual results could differ from those estimates. Estimates
and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized
in the year in which the estimates are revised and future
periods are affected.
Key source of estimation of uncertainty as at the date
of Standalone Financial Statements, which may cause
a material adjustment to the carrying amounts of assets
and liabilities within the next financial year, is in respect
of the following:
Revenue recognition:
The Company uses the percentage of completion
method in accounting for revenue from implementation
and customization projects. Use of the percentage of
completion method requires the Company to estimate
the efforts to date as a proportion of the total efforts.
Efforts have been used to measure progress towards
completion as there is a direct relationship between input
and productivity. Provisions for estimated losses, if any, on
uncompleted contracts are recorded in the year in which
such losses become probable based on the expected
contract estimates at the reporting date.
Employee stock options plan:
The Company initially measures the cost of equity-settled
transactions with employees using Black Schoies model to
determine the fair value of the liability incurred. Estimating
fair value for share-based payment transactions requires
determination of the most appropriate valuation model,
which is dependent on the terms and conditions of the
grant. This estimate also requires determination of the
most appropriate inputs to the valuation model including
the expected life of the share option, volatility and dividend
yield and making assumptions about them. The assumptions
and models used for estimating fair value for share-based
payment transactions are disclosed in note 38.
Leases:
Ind AS 116 requires lessees to determine the lease term
as the non-canceiiabie period of a lease adjusted with
any option to extend or terminate the lease, if the use of
such option is reasonably certain. The Company makes
an assessment on the expected iease term on a iease-by-
lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract
wiii be exercised. In evaluating the lease term, the Company
considers factors such as any significant leasehold
improvements undertaken over the lease term, costs
relating to the termination of the lease and the importance
of the underlying asset to Company's operations taking
into account the iocation of the underiying asset and the
avaiiabiiity of suitabie aiternatives. The iease term in future
periods is reassessed to ensure that the lease term reflects
the current economic circumstances. During the year 2025¬
26, the Company reassessed the lease term of certain
lease contracts where the non-canceiiabie (iock-in) period
expired. Based on a detaiied assessment of operationai
requirements and continued use of the ieased premises, the
Company conciuded that it is reasonabiy certain to continue
using the property beyond the iock-in period. Accordingiy,
the Company has recognized additionai iease iiabiiities and
corresponding Right-of-Use (ROU) assets in accordance
with Ind AS 116. Refer note 32.
Defined benefit plans (gratuity and other employee
benefits):
The Company's obiigation on account of gratuity and
compensated absences is determined based on actuariai
vaiuations. An actuariai vaiuation invoives making various
assumptions that may differ from actuai deveiopments in
the future. These inciude the determination of the discount
rate, future saiary increases and mortaiity rates. Due to the
compiexities invoived in the vaiuation and its iong-term
nature, these iiabiiities are highiy sensitive to changes in
these assumptions. Aii assumptions are reviewed at each
reporting date.
The parameter most subject to change is the discount
rate. In determining the appropriate discount rate, the
management considers the interest rates of government
bonds in currencies consistent with the currencies of the
post-empioyment benefit obiigation.
The mortaiity rate is based on pubiiciy avaiiabie mortaiity
tabies for the specific countries. Those mortaiity tabies
tend to change oniy at intervai in response to demographic
changes. Future saiary increases and gratuity increases are
based on expected future infiation rates for the respective
countries.
Further detaiis about gratuity obiigations are given in note 35.
Fair value measurement of financial instruments:
When the fair vaiues of financiai assets and financiai
iiabiiities recorded in the baiance sheet cannot be measured
based on quoted prices in active markets, their fair vaiue
is measured using vaiuation techniques inciuding the
Discounted Cash Fiow (DCF) modei. The inputs to these
modeis are taken from observabie markets where possibie,
but where this is not feasibie, a degree of judgement is
required in estabiishing fair vaiues. Judgements inciude
considerations of inputs such as iiquidity risk, credit risk and
voiatiiity. Changes in assumptions about these factors couid
affect the reported fair vaiue of financiai instruments. Refer
note 39 for further disciosures.
Impairment of non-financial assets:
Impairment exists when the carrying vaiue of an asset
or cash generating unit ("CGU") exceeds its recoverabie
amount, which is the higher of its fair vaiue iess costs of
disposai and its vaiue in use. The fair vaiue iess costs of
disposai caicuiation is based on avaiiabie data from binding
saies transactions, conducted at arm's iength, for simiiar
assets or observabie market prices iess incrementai costs
for disposing of the asset. The vaiue in use caicuiation is
based on a discounted cash fiow ("DCF") modei. The cash
fiows are derived from the budget for future years and do
not inciude restructuring activities that the Company is not
yet committed to or significant future investments that wiii
enhance the asset's performance of the CGU being tested.
The recoverabie amount is sensitive to the discount rate
used for the DCF modei as weii as the expected future cash-
infiows and the growth rate used for extrapoiation purposes.
Aiso, refer note 2.2(i).
Impairment of financial assets:
The Company assesses impairment of financiai assets
('Financiai instruments') and recognizes expected credit
iosses in accordance with Ind AS 109. Aiso, refer note 2.2(d).
The Company assesses for impairment of investment in
subsidiaries. Impairment exists when there is a diminution
in value of the investment and the recoverable value of
such investment is lower than the carrying value of such
investment.
c. Fair value measurement
The Company measures financial instruments at fair value at
each balance sheet date.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The
fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes
place either:
Ý In the principal market for the asset or liability - or
Ý In the absence of a principal market, in the most
advantageous market for the asset or liability
The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the
use of relevant observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:
Ý Level 1 — Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
Ý Level 2 — Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
directly or indirectly observable
Ý Level 3 — Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognized in the financial
statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the
hierarchy by re-assessing categorization (based on the lowest
level input that is significant to the fair value measurement as
a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and
the level of the fair value hierarchy as explained above.
d. Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
i. Financial assets:
Initial recognition and measurement:
All financial assets are recognized initially at fair value
plus, in the case of financial assets not recorded at fair
value through Profit and Loss, transaction costs that are
attributable to the acquisition of the financial asset.
Subsequent measurement:
For purposes of subsequent measurement, financial assets
are classified in four broad categories:
Ý Debt instruments assets at amortized cost
Ý Financial assets at fair value through Other
Comprehensive Income ("OCI") (FVTOCI)
Ý Financial assets at fair value through Profit and Loss
(FVTPL)
Ý Equity instruments measured at fair value through Other
Comprehensive Income (FVTOCI)
When assets are measured at fair value, gains and losses
are either recognized entirely in the standalone statement
of Profit and Loss (i.e. fair value through Profit and Loss) or
recognized in Other Comprehensive Income (i.e. fair value
through Other Comprehensive Income).
Debt instruments at amortized cost:
A Debt instrument is measured at amortized cost (net of any
write down for impairment) if both the following conditions
are met:
Ý the asset is held to collect the contractual cash flows
(rather than to sell the instrument prior to its contractual
maturity to realize its fair value changes), and
Ý the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest ("SPPI") on the principal amount
outstanding.
Such financial assets are subsequently measured at
amortized cost using the effective interest rate (EIR)
method. Amortized cost is calculated by considering any
discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortization is
included in finance income in the standalone statement
of Profit and Loss. The losses arising from impairment are
recognized in the standalone statement of Profit and Loss.
Financial assets at fair value through OCI (FVTOCI):
A financial asset that meets the following two conditions
is measured at fair value through OCI unless the asset is
designated at fair value through Profit and Loss under fair
value option.
Ý The financial asset is held both to collect contractual
cash flows and to sell.
Ý The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments
of principal and interest on the principal amount
outstanding.
Instruments included within the FVTOCI category are
measured initially as well as at each reporting date at fair
value. Fair value movements are recognized in OCI. However,
the Company recognizes interest income, impairment
losses & reversals and foreign exchange gain or loss in the
Profit and Loss. On derecognition of the asset, cumulative
gain or loss previously recognized in OCI is reclassified from
the equity to Profit and Loss. Interest earned whilst holding
FVTOCI debt instrument is reported as interest income
using the EIR method.
Financial assets at fair value through Profit and Loss ('FVTPL’):
FVTPL is a residual category for Company's investment
instruments. Any instruments which does not meet the
criteria for categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.
All investments (except investment in subsidiary) included
within the FVTPL category are measured at fair value with
all changes recognized in the standalone statement of Profit
and Loss.
In addition, the Company may elect to designate an
instrument, which otherwise meets amortized cost or
FVTOCI criteria, as at FVTPL. However, such election
is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency.
Derecognition:
When the Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a
third party under a 'pass-through' arrangement; it evaluates
if and to what extent it has retained the risks and rewards
of ownership.
A financial asset (or, where applicable, a part of a financial
asset or part of a Company of similar financial assets) is
primarily derecognized when:
Ý The rights to receive cash flows from the asset have
expired, or
Ý Based on above evaluation, either (a) the Company has
transferred substantially all the risks and rewards of the
asset, or (b) the Company has neither transferred nor
retained substantially all the risks and rewards of the
asset but has transferred control of the asset.
When it has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred control
of the asset, the Company continues to recognize the
transferred asset to the extent of the Company's continuing
involvement. In that case, the Company also recognizes an
associated liability. The transferred asset and the associated
liability are measured on a bases that reflect the rights and
obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Company could be
required to repay.
Impairment of financial assets:
The Company assesses at each date of balance sheet
whether a financial asset or a group of financial assets is
impaired. Ind AS 109 ('Financial instruments') requires
expected credit losses to be measured through a loss
allowance. The Company recognizes lifetime expected
losses for all contract assets and / or all trade receivables
that do not constitute a financing transaction. For all other
financial assets, expected credit losses are measured at an
amount equal to the 12-month expected credit losses or at
an amount equal to the lifetime expected credit losses if the
credit risk on the financial asset has increased significantly
since initial recognition.
ii. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through Profit and Loss or
at amortized cost, as appropriate.
All financial liabilities are recognized initially at fair value
and, in the case of loans and borrowings, net of directly
attributable transaction costs.
The Company's financial liabilities include trade payables,
lease obligations, and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and
borrowings and other payables are subsequently
measured at amortized cost using the EIR method.
Gains and losses are recognized in Profit and Loss when
the liabilities are derecognized as well as through the
EIR amortization process.
Amortized cost is calculated by considering any discount
or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortization is
included as finance costs in the standalone statement
of Profit and Loss.
Derecognition:
A financial liability is derecognized when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of
the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized
in the standalone statement of Profit and Loss.
iii. Offsetting of financial instruments:
Financial assets and financial liabilities are offset and
the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on
a net basis, to realize the assets and settle the liabilities
simultaneously.
iv. Reclassification of financial assets:
The Company determines classification of financial
assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for
financial assets which are equity instruments and
financial liabilities. For financial assets which are debt
instruments, a reclassification is made only if there is
a change in the business model for managing those
assets. Changes to the business model are expected
to be infrequent. The Company's senior management
determines change in the business model as a result
of external or internal changes which are significant to
the Company's operations. Such changes are evident to
external parties. A change in the business model occurs
when the Company either begins or ceases to perform
an activity that is significant to its operations. If the
Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification
date which is the first day of the immediately next
reporting period following the change in business
model. The Company does not restate any previously
recognized gains, losses (including impairment gains or
losses) or interest.
e. Property, plant and equipment
Property, plant and equipment is stated at cost, net of
accumulated depreciation and accumulated impairment
losses, if any. Such cost includes the cost of replacing part of
the plant if the recognition criteria are met.
Capital work in progress is stated at cost. Capital work-in¬
progress comprises of expenditure incurred for construction
of leasehold improvements. The cost comprises purchase
price, borrowing costs if capitalization criteria are met,
directly attributable cost of bringing the plant and equipment
to its working condition for the intended use and cost of
replacing part of the plant and equipment.
Property, plant and equipment are eliminated from financial
statements, either on disposal or when no future economic
benefits are expected from its use or disposal. Losses arising
in case of retirement of property, plant and equipment and
gains or losses arising from disposal of property, plant and
equipment are recognized in standalone statement of Profit
and Loss in the year of occurrence.
The residual values, useful lives and methods of depreciation
of property, plant and equipment are reviewed at each
financial year end and adjusted prospectively, if appropriate.
f. Depreciation and amortization
Depreciation on property, plant and equipment with finite
useful lives is calculated on a straight-line basis over the
useful lives of the assets estimated by the management.
The Company, based on technical assessment made by
technical expert and management estimate, depreciates
certain items of property, plant and equipment over
estimated useful lives which are different from the useful
life prescribed in Schedule II to the Companies Act, 2013.
The management believes that these estimated useful lives
are realistic and reflect fair approximation of the period over
which the assets are likely to be used.
The assets' residual values, useful lives and methods
of depreciation are reviewed at each financial year and
adjusted prospectively, if appropriate. The range of useful
lives of the property, plant and equipment are as follows:
Leasehold improvements are amortized over the period of
lease term or the estimated useful life of assets, whichever
is lower.
g. Investment property
i. Recognition and measurement:
Investment property is property held either to earn
rental income or for capital appreciation or for both,
but not for sale in the ordinary course of business, use
in the production or supply of goods or services or for
administrative purposes. Upon initial recognition, an
investment property is measured at cost. Subsequent
to initial recognition, investment property is measured
at cost less accumulated depreciation and accumulated
impairment losses (if any).
Initial direct costs incurred by the Company in negotiating
and arranging an operating lease are added to the carrying
amount of the respective Investment property and are
amortized over the lease term on the same basis as the
lease income.
Though the Company measures investment properties
using cost-based measurement, the fair value of investment
properties are disclosed in the notes (Refer note 4). Fair
values are determined based on an annual evaluation
performed by an accredited external independent
valuer applying a valuation model recommended by the
International Valuation Standards Committee.
ii. Depreciation:
Depreciation on investment properties is provided on the
straight-line method as per the useful life estimated by
the management.
The estimated useful life of building classified as an
investment property is 58 years. The estimated useful life
is different from the useful life prescribed in Schedule II
to the Companies Act, 2013. The management believes
that these estimated useful lives are realistic and reflect
fair approximation of the period over which the asset is
likely to be used.
h. Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortization and accumulated impairment losses, if any.
Intangible assets are amortized on a straight-line basis over
the estimated useful economic life. The Company uses a
rebuttable presumption that the useful life of an intangible
asset will not exceed ten years from the date when the
asset is available for use. If the persuasive evidence exists
to the affect that useful life of an intangible asset exceeds
ten years, the Company amortizes the intangible asset
over the best estimate of its useful life. Such intangible
assets and intangible assets not yet available for use are
tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are
assessed for impairment whenever there is an indication
that the intangible asset may be impaired.
The amortization period and the amortization method are
reviewed at least at each financial year end. If the expected
useful life of the asset is significantly different from previous
estimates, the amortization period is changed accordingly. If
there has been a significant change in the expected pattern
of economic benefits from the asset, the amortization
method is changed to reflect the changed pattern and are
treated as changes in accounting estimates.
An intangible asset is derecognized upon disposal (i.e., at
the date the recipient obtains control) or when no future
economic benefits are expected from its use or disposal.
Gains or losses arising from de-recognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and
are recognized in the standalone statement of Profit and
Loss when the asset is derecognized.
i. Impairment of non-financial assets
Non-financial assets including property, plant and
equipment, right of use assets and intangible assets with
finite life are evaluated for recoverability whenever there
is any indication that their carrying amounts may not be
recoverable. If any such indication exists, the recoverable
amount (i.e. higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis
unless the asset does not generate cash flows that are
largely independent of those from other assets. In such
cases, the recoverable amount is determined for the CGU to
which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated
to be less than its carrying amount, the carrying amount of
the asset (or CGU) is reduced to its recoverable amount. An
impairment loss is recognized in the standalone statement
of Profit and Loss.
For assets excluding goodwill, an assessment is made
at each reporting date to determine whether there is an
indication that previously recognized impairment losses
no longer exist or have decreased. If such indication exists,
the Company estimates the asset's or CGU's recoverable
amount. A previously recognized impairment loss is
reversed only if there has been a change in the assumptions
used to determine the asset's recoverable amount since the
last impairment loss was recognized. The reversal is limited
so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognized for the asset in
prior years. Such reversal is recognized in the standalone
statement of Profit and Loss unless the asset is carried at a
revalued amount, in which case, the reversal is treated as a
revaluation increase.
j. Leases
The Company assesses at contract inception whether a
contract is/ contains a lease. That is, if the contract conveys
the right to control the use of an identified asset for a period
of time in exchange for consideration.
Company as a lessee:
The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and
leases of low-value assets. The Company recognizes lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
i. Right-of-use assets:
The Company recognizes right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognized,
initial direct costs incurred, and lease payments made
at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated
on a straight-line basis over the lease term.
If ownership of the leased asset transfers to the Company
at the end of the lease term or the cost reflects the exercise
of a purchase option, depreciation is calculated using the
estimated useful life of the asset.
The right-of-use assets are also subject to impairment.
Refer note 2.2(i) Impairment of non-financial assets
ii. Lease liabilities:
At the commencement date of the lease, the Company
recognizes lease liabilities measured at the present
value of lease payments to be made over the lease term.
In calculating the present value of lease payments, the
Company uses its incremental borrowing rate at the
lease commencement date because the interest rate
implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
lease payments (e.g., changes to future payments resulting
from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an
option to purchase the underlying asset.
iii. Short term leases and leases of low-value assets:
The Company applies the short-term lease recognition
exemption to its short-term leased assets (i.e. those
leases that have a lease term of 12 months or less
from the commencement date and do not contain a
purchase option). It also applies the lease of low-value
assets recognition exemption to leased assets that are
considered to be low value. Lease payments on short¬
term leases and leases of low-value assets are recognized
as expense on a straight-line basis over the lease term.
Company as a lessor:
Leases in which the Company does not transfer substantially
all the risks and rewards incidental to ownership of an asset
are classified as operating leases. Rental income arising is
accounted for on a straight-line basis over the lease terms.
Initial direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the
leased asset and recognized over the lease term on the
same basis as rental income.
k. Equity investments in subsidiaries
Investments in subsidiaries are classified as non-current
investments. The Company has availed the option available
in Ind AS 27 to carry its investment in subsidiaries at
cost. Impairment recognized, if any, is reduced from the
carrying value.
On disposal of an investment, the difference between its
carrying amount and net disposal proceeds is charged or
credited to the standalone statement of Profit and Loss.
l. Revenue recognition
i. Revenue from contracts with customers:
The Company derives its revenues from software and IT-
enabled service including services provided to related
parties.
Ind AS 115 establishes a five-step model to account for
revenue arising from contracts with customers and requires
that revenue be recognized at an amount that reflects the
consideration to which an entity expects to be entitled in
exchange for transferring goods or services to a customer.
Ind AS 115 requires entities to exercise judgement, taking
into consideration all of the relevant facts and circumstances
when applying each step of the model to contracts with
their customers. The standard also specifies the accounting
for the incremental costs of obtaining a contract and the
costs directly related to fulfilling a contract.
Revenue is recognized upon transfer of control of promised
services to customers in an amount that reflects the
consideration the Company expect to receive in exchange
for those services.
The following specific recognition criteria must also be met
before revenue is recognized:
Revenue from software services provided on a time-and-
material basis is recognized upon performance of services
and at the agreed contractual rates. Revenue from fixed
price contracts is recognized over the period of the contracts
using the percentage completion method determined by
relating the actual cost incurred to date to the estimated
total cost of the contract.
In case of multiple element arrangements for sale of
software license, related implementation and maintenance
services, the Company applies the guidance in Ind AS 115,
by applying the revenue recognition criteria for each distinct
performance obligation. The arrangements generally meet
the criteria for considering the sale of software license,
related implementation and maintain services as distinct
performance obligation. For allocating the consideration,
the Company has measured the revenue in respect of
each distinct performance obligation of a transaction at
its standalone selling price, in accordance with principles
given in Ind AS 115. The price that is regularly charged
for an item when sold separately is the best evidence of
its standalone selling price. In cases where the Company
is unable to determine the standalone selling price, the
Company has used a residual method to allocate the
arrangement consideration. In these cases, the balance of
the consideration, after allocating the standalone selling
price of undelivered components of a transaction has been
allocated to the delivered components for which specific
standalone selling price do not exist.
Provisions for estimated losses on contracts are recorded in
the period in which such losses become probable based on
the current contract estimates. The Company classifies the
right to consideration in exchange for deliverables as Trade
receivable (including unbilled revenue). A receivable is a
right to consideration that is unconditional upon passage of
time. Revenue in excess of billing is classified as Unbilled
revenue while billing in excess of revenue is classified
as Deferred revenue. Unbilled revenue where there is
unconditional right to consideration, and only passage
of time is required as per contractual terms is classified
as financial assets. Revenue recognition for fixed-price
consulting contracts is based on percentage-of-completion
method. Invoicing to the customers is based on milestones
as defined in the contract. This would result in the timing
of revenue recognition being different from the timing of
billing the customers. Unbilled revenue for fixed-price
development contracts is classified as contract asset (non¬
financial asset) as the contractual right to consideration is
dependent on completion of contractual milestones.
The Company collects goods and services tax and other
taxes as applicable in the respective tax jurisdictions
where the Company operates, on behalf of the government
and therefore it is not an economic benefit flowing to the
Company. Hence, it is excluded from revenue
Performance obligations and remaining performance
obligations
The remaining performance obligation disclosure provides
the aggregate amount of the transaction price yet to be
recognized as at the end of the reporting period and an
explanation as to when the Company expects to recognize
these amounts in revenue.
Applying the practical expedient as given in Ind AS 115,
the Company has not disclosed the remaining performance
obligation related disclosures for contracts where the
revenue recognized corresponds directly with the value
to the customer of the entity's performance completed to
date, typically those contracts where invoicing is on time
and material basis.
Remaining performance obligation estimates are subject
to change and are affected by several factors, including
terminations, changes in the scope of contracts, periodic
revalidations, adjustment for revenue that has not
materialized and adjustments for currency.
ii. Other income:
Dividend income is recognized when the Company's right
to receive dividend is established, which is generally when
shareholders approve the dividend.
Interest income is recognized as it accrues in the
standalone statement of Profit and Loss using effective
interest rate method.
m. Foreign currencies
i. Initial recognition
Foreign currency transactions are recorded in the reporting
currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the
foreign currency at the date of the transaction.
ii. Conversion
Foreign currency monetary items are reported using the
closing rate. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency
are reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured
at fair value or other similar valuation denominated in a
foreign currency, are translated using the exchange rate
at the date when such value was determined.
iii. Exchange differences
Exchange differences arising on the settlement of
monetary items or on reporting monetary items of
Company at rates different from those at which they were
initially recorded during the year, or reported in previous
financial statements, are recognized as income or as
expenses in the year in which they arise except those
arising from investments in non-integral operations.
The Company's Standalone Financial Statements are
presented in Rs. The Company determines the functional
currency as Rs. on the basis of primary economic
environment in which the entity operates.
In determining the spot exchange rate to use on initial
recognition of the related asset, expense or income
(or part of it) on the derecognition of a non-monetary
asset or non-monetary liability relating to advance
consideration, the date of the transaction is the date on
which the Company initially recognizes the non-monetary
asset or non-monetary liability arising from the advance
consideration. If there are multiple payments or receipts
in advance, the Company determines the transaction date
for each payment or receipt of advance consideration.
n. Taxes
Tax expense comprises of current and deferred tax.
Current income tax:
Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or
substantively enacted, at the reporting date.
Current income tax relating to items recognized outside
profit or loss is recognized outside profit or loss (either in
Other Comprehensive Income or in equity). Current tax items
are recognized in correlation to the underlying transaction
either in OCI or directly in equity. Management periodically
evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to
interpretation and considers whether it is probable that a
taxation authority will accept an uncertain tax treatment.
The Company reflects the effect of uncertainty for each
uncertain tax treatment by using either most likely method
or expected value method, depending on which method
predicts better resolution of the treatment.
Deferred tax:
Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable
temporary differences, except:
Ý When the deferred tax liability arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss.
Ý In respect of taxable temporary differences associated
with investments in subsidiaries when the timing of the
reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible
temporary differences and the carry forward of any unused
tax losses. Deferred tax assets are recognized to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry
forward of unused tax losses can be utilized, except:
Ý When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
Ý In respect of deductible temporary differences associated
with investments in subsidiaries deferred tax assets are
recognized only to the extent that it is probable that the
temporary differences will reverse in the foreseeable
future and taxable profit will be available against which
the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be
utilized. Unrecognized deferred tax assets are re-assessed
at each reporting date and are recognized to the extent that
it has become probable that future taxable profits will allow
the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is realized or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted
at the reporting date.
Deferred tax relating to items recognized outside Profit and
Loss is recognized outside Profit and Loss (either in OCI or in
equity). Deferred tax items are recognized in correlation to
the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate
to the same taxable entity and the same taxation authority.
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